The Economic and Social Value of Financial Literacy

The main objective of this chapter is to provide new insights into the economic and social value that financial literacy has for individuals and societies. Financial literacy has implications that are relevant both at a micro (especially for households) and macro-level (for the financial system and for the national economy as a whole). On the one hand, a lack of financial literacy put households a risk from making sub-optimal financial decisions and prevent them to maximize their wellbeing. On the other hand, financial literacy favors a better allocation of resources, reduces the risks associated with episodes of financial instability, and therefore, contributes to the increase of social welfare. The analysis and the empirical evidence showing the benefits (costs) of financial literacy (illiteracy) allows to conclude that policymakers have a key role to play implementing initiatives aiming to improve financial literacy of the population at all stages of life.

Pocket Cartoons

This study examines the impact of using cartoons shared through mobile devices to promote awareness and to aid in the development of financial literacy among Economics students in Malaysia. The study also investigates the use of these ‘mobile cartoons' to develop students' communication skills. The study involved a quasi-experimental methodology investigating the learning outcomes of 91 undergraduate students. Data was acquired through surveys and interviews. The results showed a higher mean for the experimental group (Mobile Learning Collaborative) than the control group (Conventional Collaborative). Future research may focus on the improvement in the design of the intervention with a particular focus on expanding the range of cartoon characters.

Individual Factors Affecting the Participation of Turkish People in the New Individual Pension System

In Turkey, the first step of the individual pension system was based on volunteerism, but the voluntary system resulted in limited participation. Thus, the second step of the system has started to be implemented mandatorily since 2017, and participants were allowed to opt-out the system within two months. More than half of participants in the system preferred to leave the system. Therefore, this study aims to examine individual factors affecting their decision of staying in this system. A survey study was conducted with 374 people selected using the random sampling method. As a result of the study, a positive relationship was found only between the dependent variable and gender, but a significant relationship was determined only between the dependent variable and education level. Based on the results of this study, it is suggested that if the system will need to be improved, the low-performing fund management of the new individual pension system should be re-audited, and the confidence in the system should be increased in this way.

Understanding the Investment Behavior of Individual Investors

The FOREX market has become a popular ground amongst all kinds of market players. The leverage transactions of the market that may generate higher profit levels with low capital/investments make it very attractive for the individual risk takers. The research investigates the trading behavior of FOREX investors relying on the survey data collected from 167 Turkish investors in 2019. Within the scope of the research, the authors evaluate whether and to what extent behavioral factors, namely demographic characteristics; personal characteristics such as personality traits, love of money, and biases like disposition effect influence investment performance. The results reveal that among the personality traits, openness to experience and conscientiousness have a positive impact while disposition effect and love of money have a negative impact on the performance of investors. Additional analysis suggests that the effects of personality traits and biases on trading performance remarkably change among subgroups of investors regarding their income level.

Trust and Household Portfolios

This article provides empirical evidence on the existence and the extent of the influence of trust in financial decisions using individual data on Italian households from the Survey on Household Income and Wealth, 2010. This article studies the relationship between, trust in people, trust in banks and more detailed previously unexplored dimensions of trust, and household financial portfolio decisions. The article provides empirical evidence that trust in people and trust in banks affect both participation in financial markets, the share of risky assets and the diversification of the financial portfolio, controlling socio-demographic factors, risk aversion, and financial literacy as well. The article finds that trust is important for individuals with a lower level of education who have limited possibilities to acquire and process information on financial markets need to rely in trustworthy relationship to define their financial portfolio. Further, we present evidence that the main channel by which trust affects financial decision making and determines too little participation, a lower share of risky assets in the financial wealth and poorly diversified portfolios is trust in family and friends.

Global Trends in Domestic savings and Longevity- Implications for India

Demographic dividend and the lowest median age among the earning population propels consumption and growth in India. Among the emerging economies, China had the leverage for growth through exports until 2008. India benefited by demographic dividend and this translates to providing income and thereby increases savings. On the other hand, the developed countries are experiencing problems of an aging economy, a deflationary scenario, and a pension burden. India, with its major workforce in the unorganized and private sector, needs to recognize the need for forward-looking policies that stimulate savings for a better lifestyle post-retirement. The study was focussed on the relationship between longevity (life expectancy), and domestic savings. The research observed divergence between the developed nations and India. A more futuristic policy action is suggested to motivate savings as the increase in population and higher levels of economic growth can be achieved with more domestic savings.

Financial Behavior of Russian Population under Crisis Phenomena

Basing on the analysis of contemporary literature sources, the category “financial behavior of population” is defined. Analysis of the factors influencing financial behavior of households under the conditions of ongoing crisis is carried out. Our quantitative study was carried out to identify the motives behind the financial strategy and the reasons limiting the financial behavior of population. Trends in the use of monetary incomes by population have been revealed, dynamics of the structure and the volume of savings has been shown. Transformations of financial strategies of households during the crisis are also demonstrated. A typology of households was developed according to the criterion of money management depending on sociodemographic characteristics, taking into account the age of the respondents, their financial standing and also their lifestyle. The purpose of this study is to determine the contents, the structure, characteristics, dynamics and other factors of financial behavior of a mass actor on the example of the Tyumen region.

Ethnicity and Household Savings in Indonesia

Household saving is very important, not only for securing the future spending of the family but also for the country's economy. Using the logit analysis on data of The Indonesia Family Life Survey (IFLS) wave three, four, and five, this chapter analyzes factors influencing, especially the role of ethnicity, upon the household savings in Indonesia. The result indicates that gender, location, and level of education are the consistent variables affecting the household saving behaviour in Indonesia across the three wave surveys. Meanwhile, as for the ethnic group variable, there are only Sunda, Batak, and Bima-Dompu that can significantly influence the people's saving behavior across the three wave surveys.

Exploring the Role of Microfinance in Emerging Nations

This chapter explains the overview of microfinance; the efficiency of microfinance institutions (MFIs) and sustainability; microfinance and interest rates; microfinance and information technology (IT); microfinance, social capital, trust, and repayment rates; microfinance and health care; informal microfinance institutions (IMFIs) and tourism entrepreneurship; and the importance of microfinance in emerging nations. Financial services provide a method for people and businesses to obtain credit and manage available assets on a continuous basis. Microfinance has a significant role in bridging the gap between formal financial institutions and rural poor households. MFIs can access financial resources from banks and other financial institutions and provide financial services to poor households. The chapter argues that promoting microfinance has the potential to enhance financial performance and reach economic goals in emerging nations.

Financing Millennials in Developing Economies

Young millennials (i.e., 18 to 24 years old) are not a primary market for the traditional banking system, especially in emerging economies. Despite the fact that almost 30% of college students have partial jobs, economic resources are limited and access to finance seems utopic. Banking services throughout the world but especially in growing economies do not fully serve students because of their lack of resources. Whether to pay for college studies or clothing, dinner or a weekend vacation, young millennials do not expect to receive banking credit from the big bank brands. In fact, this market segment is served by the retail industry with their own credit programs and financial services. In this chapter, the authors explore how young millennials have access to savings and credit, their spending behavior, their attitudes towards traditional sources of finance, and their financial inclusion and literacy. They also conducted an empirical exploratory study among college students in Mexico to hear firsthand how they managed their finances.